Propery fund colapses owing lloyds £700m

ruggedtoast

I wonder if Calamity Brown would really have embarked in the bail outs if he knew how much we were eventually going to get wrung for.

I dont think the bailouts are popular at all. Theres been a lot of anger about bonuses here.

Most people dont separate the investment banks that have done well lately from the zombie retail banks that have failed.

With the amount of bad assets the UK taxpayer has now covered, and the vast amounts of cash injected just to keep the pretense going that they are still solvent - we could presumably have re-built an entirely new part nationalised banking system from the ground up - including the offices for all the workers to sit in.

And a Starbucks in every lobby.

With free lattes after 2pm.

Generali

Really2 wrote: »

There would have been a run on every bank and the £ would be toast.

That wouldn't be the case if the BoE had acted as official receiver and kept the insolvent banks as going concerns while looking to wind them up as quickly as possible, using the banks' equity to mitigate the costs of winding them up.

Really2

Generali wrote: »

That wouldn't be the case if the BoE had acted as official receiver and kept the insolvent banks as going concerns while looking to wind them up as quickly as possible, using the banks' equity to mitigate the costs of winding them up.

I think once people saw one go, (like what happend with NR) the lot whole lot would have had a run on them.

Personally I believe (based on what the public do) the cost of just one bank failing could have brought most of them down. In most cases that would have brought down perfectly healthy banks as well as the ones with the most toxic assets.

That is my personal opinion, but like many have said we will never know now.

Generali

Really2 wrote: »

I think once people saw one go, (like what happend with NR) the lot whole lot would have had a run on them.

Personally I believe (based on what the public do) the cost of just one bank failing could have brought most of them down. In most cases that would have brought down perfectly healthy banks as well as the ones with the most toxic assets.

That is my personal opinion, but like many have said we will never know now.

Northern Rock and B&B both failed and it didn't bring the UK banking system down.

chucky

Generali wrote: »

Northern Rock and B&B both failed and it didn't bring the UK banking system down.

they're not the scale of RBS, Lloyds or HBOS though.
they also didn't have the kind of exposure across the money and banking (investment, commercial, corporate etc) "sectors" that these 3 have.

those 3 falling would have been much more pain due to their size and exposure.

Really2

Generali wrote: »

Northern Rock and B&B both failed and it didn't bring the UK banking system down.

Northern rock had to transfered to state ownership to satisfy customers that there cash was safe as the run on it.

Again B&B Loan book was taken on by the government and retail branches and savings to santander.

I would argue neither was allowed to fail. EG put in to liquidation and saver put as creditors.

If either had gone to the savings guarantee scheme (which would would not cope) there would a quick rush to make sure savings were in the safest place. In the public's eyes that would be in hand in many cases.

kabayiri

ruggedtoast wrote: »

With the amount of bad assets the UK taxpayer has now covered, and the vast amounts of cash injected just to keep the pretense going that they are still solvent - we could presumably have re-built an entirely new part nationalised banking system from the ground up - including the offices for all the workers to sit in.

I think, with the money we have 'spent' we could have put a bid in to buy India .

Then, when we see jobs being off-shored by these beloved banks we own, we could smile in the knowledge that it was lining our pockets anyway.
:beer:

Thrugelmir

tomterm8 wrote: »

I thought lloyds paid a couple of billions to get out of the asset protection scheme?

The Government is also underwriting the £165 billion of wholesale funds that LloydsHBOS needs to operate on a day to day basis. :eek:

As discussed some months back. Both RBS and Llloyds ultimately have to contract their lending books to balance assets against deposits. Both are heavily reliant on wholesale funds to stay solvent. Without the guarantee its unlikely either bank could secure the funds necessary.

Thrugelmir

Really2 wrote: »

Northern rock had to transfered to state ownership to satisfy customers that there cash was safe as the run on it.

No this wasn't the case.

NR relied upon securitisation of its mortgage book and wholesale funding for its "cashflow".

When BNP Paribas caused the alarm bells to ring re US subprime debt in early August 2007 the wholesale (inter bank) lending markets dried up. NR was left high and dry. With insufficent liquid investments to comply with regulatory requirements. It had to go the Treasury for a loan.

NR wasn't nationalised until Feb 2008. When the extent of its problems came to light. Prior to them it was hoped that NR could be sold on to another bank. By Feb 2008 it had been allowed to continue its lax lending policies for a further 6 months. :eek:

Ultimately it was the same cause that bought RBS and HBOS to its knees. The final straw for RBS was when "depositors" in the Far East decided that RBS was unsafe and started withdrawing liquid funds.

Banks can withstand making losses providing they hold sufficent reserves ie shareholders capital to cover them.